FAQs: intellectual property

While many of our clients in tech and research may already know IP law inside out, we've compiled this handy reference to all things IP for our newer clients who may need a grounding in answers to common intellectual property FAQs.

General

What is the meaning or definition of 'intellectual property'? Are there different types of intellectual property? What are some examples of intellectual property?

Intellectual property (‘IP’) refers to anything which you physically create. This can therefore include trade marks like ‘McDonalds’, specific designs like Apple products such as MacBooks and iPods, and processes like the DNA copying process.

IP is important because it gives rise to legal rights. There are two main types of intellectual property rights: registered and unregistered. The former are rights which need to be registered to be exercised and relied upon. The latter are automatic rights which arise when the property is created.

Types of registered IP are:

• Trade marks – for the protection of word(s), slogans, logos, symbols, colours, 3D shapes or sounds which identify a product or organisation.
• Patents – exclusive rights granted for an invention, which may be a product or process that provides a new way of doing something, or offers a technical solution to a problem in industrial processes and inventions.
• Registered designs – for the protection of a look of a design, including the appearance, physical shape, configuration and decoration

Types of unregistered IP are:

• Copyright – rights in work such as literature, art, music, drama, as well as films, sound recordings and typographical arrangements.
• Unregistered trade mark – a mark, logo, slogan, get-up, packaging, used by a business to identify itself or its products/services protected by the common law right of passing off in the UK.
• Design rights – rights relating to shapes of objects.
• Trade secrets/confidential information – rights in valuable information (which give your business a competitive advantage) and which is not known to the public.

The type of right which arises in relation to a created product depends on the nature of the creation. Sometimes, a single creation can be protected by more than one type of IP right.

What are intellectual property rights?

Intellectual property rights are a bundle of legal rights attached to intellectual property. The rights protect the property created by giving you exclusive rights to use the IP, and give you the freedom to choose how to use your IP.

Due to the exclusivity provided by IP rights, you can capitalise on your IP in numerous ways which includes using them in the course of your business to obtain a competitive edge, or by licensing the IP to obtain regular payment.

What intellectual property law and legislation applies in the UK?

There is no single legislation which regulates intellectual property. Instead there is numerous UK and EU legislation which applies to intellectual property created and owned.

As we’ve discussed, there are four key types of intellectual property rights; copyright, trade marks (registered and unregistered), designs (registered design and design rights), and patents.

Each of these rights has its own legislation which governs the relevant IP. For example:

• Copyrights and unregistered design rights are regulated by the Copyright, Designs and Patents Act 1988
• Trade marks are regulated by the Trade Marks Act 1994 (and the common law of passing off for unregistered trade marks)
• Registered design rights are regulated by the Registered Designs Act 1949
• Patents are regulated by the Patents Act 1977

Do you really need an intellectual property solicitor? What does an intellectual property solicitor actually do?

If you own a business, then there’s a high chance you own intellectual property, even if it’s simply your company name, logo and brand identity. Any IP which is particularly valuable for your business should be protected. If you’re unsure whether it’s worth protecting IP that you own, we recommend you consult an intellectual property solicitor.

If you are entering an agreement in which intellectual property is involved, such as selling your business, licensing your IP, entering a joint venture with another party, or franchising, then it is essential to seek advice from an IP solicitor. An IP solicitor can help by advising you on how to protect your IP, and negotiate the relevant agreement and adequately protect your commercial interests.

What kinds of intellectual property have Harper James Solicitors IP team worked with?

Our IP solicitors have experience in dealing with the full range of intellectual property rights, including identifying the key IPR owned by a business, the protection of IPR, exploitation and dealing with infringement in the UK and internationally.

What general help and advice on intellectual property is available to your business?

The UKIPO is a good resource for information on the registration of patents, trade marks and registered designs in the UK. Similarly, the EUIPO and WIPO offer advice on the protection of such rights internationally.

Is your company name, website name or product name a form intellectual property?

Yes – company, website and product names are all intellectual property because names are a physical property you have created.

Registering your company name with Companies House means that no other company can register under that name. However, this isn’t the strongest form of protection available. Although you may have registered your company name, a sole trader or partnership (not registered with Companies House) may still trade under a name which is the same or similar to your company name. To avoid this and to protect your business name, you can register your company name as a trade mark with the UKIPO, provided it meets the criteria for registration. You may also wish to consider registering your business name as a trade mark in any other countries in which you trade outside of the UK.

A trade name is different to the company name because it’s the name you’ll operate and trade under. To protect your trade name and reserve exclusive rights to use that trade name, you should register the name as a trade mark. This stops sole traders, partnerships and others from using that as their own trade name.

A domain name registration for your website protects your URL. However a domain name registration which contains your business or product name does not prevent anyone else from using your business or product name. Only a registered trade mark would afford you such rights.

And last but not least, a product name can be protected by applying to register the name as a trade mark for that product. Upon successfully registering, you’ll have exclusive rights to use that product name.

Can intellectual property be sold? If so, how and where?

Yes, it’s possible to sell your intellectual property.

This may be desirable if you don’t want to undertake the work associated with exploiting the IP, or if you don’t have the time to commit to exploiting the IP. By selling, you’ll be paid for the time and money you’ve spent developing the intellectual property and receive consideration which reflects the earning potential of the IP.

To sell your IP, you’ll need to enter an intellectual property sale agreement or an assignment with the other party (the transferee, such as the buyer/assignee). This will state that you sell or transfer all your rights, interest and title in the intellectual property to the transferee.  It is common to have extensive warranties which assure the transferee that you have the right to sell or transfer the IP, that the IP is properly registered where necessary, and that it does not infringe on the rights of third parties.

If you are considering selling your intellectual property, our team of specialist intellectual property lawyers have worked extensively with tech start-up companies and SMEs, and can navigate you through the sale.

What are intellectual property assets?

Some types of intellectual property are considered capital assets. This means they may be recorded on a company’s balance sheet as ‘intangible assets’.

IP that can be considered as an asset includes:

• patents which protect products
• designs which are essential to the style and product image
• trade marks that are distinctive and unique to the brand
• copyright which protects creative work
• confidential information including know-how and trade secrets

Can intellectual property assets be accurately valued? How?

Yes, intellectual property can be valued. However, the methods of valuation cannot guarantee 100% accuracy. There are three potential ways to value IP:

1. Market approach
   
   This will give you a value which is determined by considering the value of similar assets in the market.
   
   Be aware that this may not be the most accurate valuation because no two IP transactions will be the same. Patents, by nature, are granted because of their unique quality, meaning it’s difficult to find a market value for bespoke assets.
2. Income approach
   
   The value is determined by considering the future income the IP can bring, and the cost of generating that income. The end value is considered the ‘Net Present Value’ (NVP).
   
   Similar to the market method, the income method can be slightly inaccurate because it is difficult to estimate the future income of the IP. Since the market is always changing and competition in niche areas increases over time, you can only estimate the future income.
3. Cost approach
   
   Using this method, the value of the intellectual property is determined by considering the costs you incurred when creating the IP.
   
   These costs would include:
   1. labour
   2. materials and equipment
   3. research and development
   4. creating a prototype
   5. testing and trials
   6. regulatory approval and certification
   7. registering the IP
   8. overheads for utilities, accommodation and support staff

Additional information in the form of 'Supporting Checklists' are provided by the Government for anyone seeking to value their intellectual property.

Can intellectual property be shared, divided or jointly owned?

Yes, intellectual property can be jointly owned by two or more individuals. Joint ownership is particularly common when you pursue business with another party under a joint venture arrangement, collaboration, and shared research and development.

If you jointly own intellectual property, the default position under UK and EU law is that you and the other co-owners are the only individuals that can exploit the IP.  This means you cannot assign, license or sublease the intellectual property to third parties. The exception to this is where you and the joint owners have agreed that you are entitled to grant third parties the right to exploit the intellectual property.

Other situations in which you may be a co-owner of IP include the following:

• Copyright
  
  The first owner of work created by an individual is the owner. If the work is created by multiple individuals (co-authors), all the co-authors will be the joint owners of the work.

• Design
  
  A joint design is a design produced by collaboration of two or more designers, and the contribution of each is not distinct from one another.

• Patents
  
  An application for a patent can be made by a single applicant or by joint applicants. Under the Patents Act 1977, the right to apply lies with the inventor, unless the inventor created the intellectual property under a contract such as an employment contract.
  
  Where there are co-owners of a patent, each co-owner has an equal undivided share in the patent unless there is an agreement stating otherwise.

• Trade marks
  
  A joint ownership over a trade mark arises when two or more people apply to jointly register a trade mark, or when the owner of a trade mark assigns a share in the trade mark to another person.
  
  Where you are a joint owner of a trade mark, in the absence of an agreement suggesting otherwise, the co-owners of the trade mark are entitled to equal undivided shares in the registered mark. This means that a tenancy in common arises, so the co-owner’s share can pass on to the person’s personal estate on death.

In respect of all jointly owned intellectual property, each co-owner is entitled to use the intellectual property without requiring the consent of the other co-owner. However, a co-owner is not entitled to grant a licence, assign or mortgage their share of the IP without the explicit consent of the other co-owner(s).

Can intellectual property be transferred?

Yes, IP can be transferred to a third party. Due to the rights attached to the IP, to successfully transfer IP, you would need to sign a document which states that you are assigning your rights, interest and title in the IP, to the assignee. Although this is sufficient to enable a transfer, a more thorough agreement is likely to be needed as the assignee will want warranties and indemnities from you. These terms will include a warrant that you have the right to assign, that the IP rights are properly registered, and that there is no pending litigation regarding the IP.

Whilst an assignment is the common method of transfer, patents, trade marks, and registered designs can also be transferred by the operation of law (such as a court order) and by testamentary disposition (for example, passed on through death).

Can intellectual property be depreciated?

It’s possible for IP which declines in value to be depreciated when calculating your tax obligation. For this reason, only some patents, registered designs and copyrights will qualify as depreciating assets.

Speak to our specialist tax solicitors, who can help you take advantage of different tax reliefs for which you may be eligible.

Can you buy intellectual property?

Yes – you can buy intellectual property. Sometimes, a person who has created intellectual property may want to sell the IP because they do not want to exploit the IP themselves. You can therefore enter an intellectual property sale agreement, which will transfer all interests and rights in that intellectual property to you.

As a result of the transfer, you can utilise the intellectual property in any way that you wish provided that you do not infringe any third party’s intellectual property rights.

Can you insure intellectual property?

Yes, you can insure intellectual property. As intellectual property can be a highly valuable asset for your business, you may want to get insurance to protect your IP against risks.

Before you obtain insurance for your intellectual property, it is important you understand your intellectual property and how to protect it. Once it is protected, you can decide if insurance is something you should pursue.

One type of insurance you can obtain is ‘before the event’ legal expenses insurance. This will cover your legal costs and may also cover the legal costs of someone you are in dispute with regarding any IP infringement issues.

An alternative to this is an IP insurance product. This may cover one or more of the following:

• Legal costs of you obtaining an opinion on the likelihood of successfully enforcing or defending an IP claim
• Legal cost of any action you take to stop third parties infringing on your IP rights, and any defence against all allegations of infringement
• Any damages payable if you lose an infringement action
• Legal costs of defending challenges to validity of your rights
• Revenue lost as a result of you losing IP rights
• Liabilities arising under guarantees you give to third parties
• Losses from a variety of cyber incidents including intellectual property right infringement

Can you use someone else’s intellectual property?

Yes, you can use someone else’s intellectual property if they transfer the intellectual property to you by way of selling or assigning the IP to you, or if they give you permission (usually by way of license).

If you use someone else’s intellectual property without permission or without having ownership/interest in the IP by way of a transfer, you will be infringing on that person’s intellectual property rights. There is a range of IP offences, both civil and criminal, and the most severe infringement can lead to you facing a fine, prison sentence, or both. Take care not to use someone else’s IP without permission.

If you’re involved in a dispute, consult our intellectual property dispute solicitors.

Can intellectual property be inherited?

Yes. When the owner of intellectual property (such as registered design, patent or trade mark) dies, they can leave their intellectual property as an asset for another organisation or person.

Key considerations include:

• Whether you want to split your copyright into separate shares so beneficiaries can receive different proportions
• Detailing your instructions for any patents owned, as the patent registrar will need a certified copy of the probate or letters of administration to update the register with the new owner

Can intellectual property be used as collateral?

Yes, intellectual property rights can be used as collateral, as banks will accept this as an asset for security.

If you do wish to use your IP as collateral, you should be aware of the fact that lenders do not value IP as highly as other assets. Whilst it is common security, the long-term value of IP is uncertain as it can change according to your behavior and performance. Similarly, the process for valuing IP initially is also time-consuming and complex, making a less than ideal form of security. Lenders are also concerned about the fluidity of the market for disposing of the IP to realise its value. If the IP is niche and is subject to low demands, the lender will be concerned about its inability to monetise the asset.

Can intellectual property be capitalised or successfully exploited? How?

Yes, you can capitalise and successfully exploit intellectual property in numerous ways. For example, you may:

• Sell your intellectual property
• Use intellectual property as collateral to secure finances for the growth of your business
• License the IP
• Assign the IP
• Use your intellectual property. This may be your preferred option if your intellectual property is a patent for a unique invention which you have created. For example, if you invented a pen with a scanner, you can exploit this creation by preventing others from using your creation to make profits. This will allow you to sell a bespoke product in a market with reduced competition.
• Consider franchising your business if you consider that it is a suitable way of growing your brand and know-how. Read more about our legal services for franchising your business and Franchising Your Business FAQs.

Are contracts intellectual property?

Contracts are not generally considered to be intellectual property. However, goodwill arising from contracts and which is related to intellectual property, namely trade marks, can be attached when the IP is sold, assigned, or licensed.

Goodwill in English law is an intangible asset which can be sold, used for security, and bequeathed in a will. In the context of trade marks, goodwill can accrue through extensive use and investment in the promotion of the brand. In the UK, the common law of passing off protects the goodwill and reputation accrued in an unregistered trade mark.

What are intellectual property capital allowances?

Capital allowance is a deduction in value from the total profits your business makes before tax is paid. As intellectual property usually constitutes an asset you buy for the purpose of your business operation, you can usually claim capital allowance for it.

The cost of the IP can usually be fully deducted from your profits when calculating your taxable profit. However, it is important to bear in mind that you have an annual investment allowance of £200,000 in a one-year period. The cost of any intellectual property (or other asset which qualifies for capital allowance) which exceeds this £200,000 allowance cannot be deducted for tax purposes.

An alternative (or in addition) to claiming capital allowance is to claim your ‘written down allowance’. This allows you to deduct a percentage of the value of your intellectual property from the profits each year. The percentage of deduction will depend on what ‘pool’ the intellectual property will fall.

To ensure you are making the most of the tax advantages that you may qualify for, you should seek specialist legal advice from a tax solicitor.

Can royalties be payable on intellectual property?

Royalties are commonly paid by a third party which is granted IP rights under a license. If you grant a third party the right to use your intellectual property (which you have registered and protected adequately), you can require the licensee to pay a royalty for this right. This will usually be a fixed amount paid on a monthly basis.

If you are considering licensing your intellectual property, when deciding the appropriate royalty, you should consider the following:

• the rate of royalty in the same business/industry/market for that intellectual property
• research and development costs in developing the IP
• capital costs of licensee to implement IP
• nature of IP (such as a breakthrough/improvement)
• state of IP (prototype/copy)
• cost, risk and delay if forced to litigate
• nature of rights granted
• expected market penetration and volumes
• method of payment

What are design rights and registered designs?

UK unregistered design right comprises of the shape or configuration (whether internal or external) of the whole or part of an article. It applies to creations with particular distinctive shape and configuration, (for example, how different parts of the design are arranged together). UK unregistered design right does not protect design features which are surface decoration or decorative in nature. A design must be original to qualify for protection. UK unregistered design right subsists for 15 years from the date the design was first recorded in a design document.

On the creation of an original design in the EU a design can qualify for protection as an unregistered community design, which subsists for three years from the date the design was first made available to the public in the EU. An EU design right protects the appearance of the whole or part of a product (including its inside) and may arise from the lines, contours, colours, shape, texture, material or ornamentation of the product.

UK registered design can protect both 2D and 3D shapes. It can protect parts of an article provided they are visible. The design must be new and create a different overall impression from previous designs. A registered design can last for up to 25 years. An application is made to the UKIPO to register a design.

You can also protect industrial designs throughout the EU by applying for a Community registered design at the EUIPO.

Find out more in our Registered Design Rights FAQs.

Can databases be intellectual property?

As databases are a collection of data arranged in a systematic/methodical way, and are individually accessible by electronic or other means, they are considered to be a literary work under the Copyright Design and Patents Act 1988.  Because of this, under English law, databases are protected by a ‘database right’. The first owner of the database is considered the ‘maker’ of a database: that is, the person who obtains, verifies and/or presents the contents of the data. Due to this database right, no one else can extract and/or re-use all or a substantial part of the contents of their database.

Intellectual property protection strategies

What kind of intellectual property can be protected?

The types of intellectual property that your business may own includes any innovative products like a unique technological invention, designs such as ornamental designs on manufactured products, and your brand name and logo. If you produce work such as art, music, literature, research, this can also be protected. As these types of intellectual property are different in nature, they are protected in different ways.

Trade secrets such as business plans, customer information, business methods, industrial processes, recipes, and formulas are information that add value to a business. This type of intellectual property is protected differently. The Trade Secrets Directive protects trade secrets by making it unlawful to disclose and attain trade secrets without authorisation. This is different to other mentioned IP rights, which give you exclusive rights in the IP.

For help on identifying what intellectual property your business owns and the best strategy to protect it, contact our specialist intellectual property strategy lawyers.

Why are intellectual property rights and protection so important?

As we’ve discussed, protecting your intellectual property ensures you have exclusive rights to use that intellectual property within that protected jurisdiction. If you fail to protect your IP, someone else can use that IP and prevent you from properly exploiting that IP. Reducing the profitability of your IP, it can also damage your reputation if the IP used by another party includes using your brand name. By operating a poor-quality service under your brand name, your image could accumulate a bad reputation.

Once you have protected your intellectual property, it is easier to take legal action when a third party infringes your intellectual property rights. For example, if you protect your logo as a trade mark, your registered right means you can easily prove that you have the exclusive right to use the logo. However, if you fail to protect your logo, you have to pursue a tortious claim of passing off. This cause of action is more difficult as you must establish:

• that you have a reputation attached to that brand name;
• that a misrepresentation has been made by the other party which has led others to believe the goods or services are actually yours; and
• there is damage caused to your business (for example, reputational).

To protect your business, and to facilitate quick resolution of intellectual property infringement disputes, you should protect your most valuable intellectual property.

What are the different strategies to protect your intellectual property?

If you wish to protect your intellectual property, you must first conduct an intellectual property audit, by identifying all the key IP your business owns. You’ll need to identify the types of intellectual property you have that may be protected.

Once you’ve figured out what intellectual property you own, you then need to decide how much that IP is worth to you and your business. If the IP is not something that you can exploit for profit, then it is not really worth investing time and money to protect that IP, unless reputational damage would occur from use by an infringer.

Take for example your brand name and logo. This is essential to your business and should be protected to ensure no one else uses the brand name and logo to conduct their own activity – this would create confusion for the public as there would be an inconsistency in business service offered under that brand image, and would damage your reputation.

Compare this to a database held for record purposes only. As you may have adequately protected this database, and it will not be used to make further profits, you may decide not to protect it.

If you decide that you don’t want to register your intellectual property for protection, there are other ways in which you can protect the intellectual property. For example, if you have created an invention which is new but will be rapidly followed by similar inventions by competitors such that the protection would have little impact, you may choose instead to seek protection from non-disclosure agreements. Entering a non-disclosure agreement with any individual involved in the creation of the invention and any individual with knowledge of the invention (and its creation), will subsequently prohibited from revealing information about this invention. This would allow your business to complete the development of the product and launch the product before any competitor ‘catches up’.

However, if you do have important intellectual property, it’s advisable to protect these rights properly by registering with the Intellectual Property Office (IPO).

What is the Intellectual Property Office (IPO) and do you need to register with it?

The IPO is the official governmental body which regulates intellectual property rights in the UK. This body is responsible for the administrative tasks of considering applications for trade marks, patents, design rights, and accepting or rejecting the applications.

You do not need to register with the IPO. However, if you have intellectual property which you need to protect, then you will need to apply to the IPO to register your intellectual property (with a fee).

How and when do you register your intellectual property?

Here are the different methods of IP protection, the time limit for applying, and the process to register:

Intellectual property	Protection	Time limit for application	Procedure
Writing and literary work, art, photography, films, TV, music, web content, marketing leaflets, photographs, sound recordings and software programmes.	Automatic copyright. This protection will last the lifetime of the creator plus 70 years after the death of the creator.	N/A	If you have any work which you consider yourself to have legal rights in, you can include a © on the work. However, this is not essential for the right to arise.
Database (collection of material organised so the separate data is easily accessible – such as customer lists, directories, encyclopedias and card index systems).	Automatic database right protection. The protection usually lasts for 15 years.	N/A	N/A
Product names, business/brand name, logos and jingles. Can therefore include word(s), images, colour, shape, sound, smell, or 3D form.	Trade marks are protected for a 10 year period. Upon the expiry of this period, you can renew the protection for a further 10 years by paying the renewal fee.	Four months	Register a trade mark here To successfully register, you will need to show that your trade mark is distinctive and not used by anyone else in your trade. This trade mark application will then be advertised to allow anyone claiming that right to object to your application. A trade mark search will also be conducted to ensure there are no conflicting trade marks. Once you are registered, you can choose to display the ® symbol in the territory where the mark is registered.
Appearance of a product including shape, packaging, patterns, colours and decoration.	Registered designs. This right lasts for five years and grants you exclusive right to the manufacture, stock, sale, import/export of a product carrying your design. You can renew this right for up to a total of 25 years.	One month	Register a design here To register successfully, you need to show the design is novel and has ‘individual character’ and is not already publicly available.
Inventions and products such as machines and machine parts, tools and medicine.	Patents. This right lasts 20 years and gives you exclusive rights over manufacture, use, sale and import of the invention.	Five years	Apply for a patent here This is much harder as your application will be examined in detailed to determine if your invention can be patented. When applying, you must show the difference between existing inventions and your invention, to show it’s not obvious to an ‘unimaginative but skilled person’ who has common general knowledge in that area. A patent search will also be undertaken to check if other patents exist which overlap or impact your patent.If you do wish to exploit your patent overseas, you need to apply for additional patent protection (such as a European patent or other international patent protection).
Trade secrets like formulas, manufacturing processes, designs, and business plans.	Various confidentiality agreements.		This type of IP can only be protected by taking measures to keep this information confidential, such as by entering non-disclosure agreements.

What is intellectual property indemnification and how would it be used?

Intellectual property indemnification is a clause where you (as the owner of the IP), agree to indemnify another party when they rely on your intellectual property under a license, assignment or sale, and the other party then faces loss because of a third party claim of intellectual property right infringement.

Providing security through indemnities reflects positively on your reputation: you’re more likely to attract licensees and assignees to use your intellectual property.

When you do draft an intellectual property indemnification, it is important to seek legal advice. You need to ensure the clause is detailed enough to address all the unique issues which arise with intellectual property. This may include allocation of risk and liability between you and the other party, the procedures for notifying you about potential infringements of IP right by a third party discovered by the other party, and a maximum amount that is payable under the indemnity clause.

Can intellectual property be licensed?

Yes, intellectual property can be licensed. This is a common way to exploit intellectual property. By protecting your creation, you can grant licensees the right to manufacture your protected product for their own sales, in return for royalties.

Choosing to grant such a license will have the benefit of allowing your product to reach a bigger market. This can improve the business reputation associated with the product and also provide you with an income in the form of royalty.

Can you let someone use your intellectual property? How and why would you do this?

Yes, you can let someone else use your intellectual property. To ensure control over the other person’s use of your intellectual property, you should enter either a licence with the other person or even consider franchising. This will allow you to retain ownership of the IP, whilst the licensee/franchisee profits from exercising the IP rights, and pays you a fee. The alternative way of allowing a third party to use your IP is to assign the IP. This would transfer the full interest meaning you can no longer profit from the IP after the transfer.

You may choose to license or franchise to another party because it will allow you to expand your intellectual property in the market, whilst also receiving an income.

If you want to license your intellectual property, you can enter a license agreement with the other party. You should seek legal advice when drafting the licensing agreement, as the agreement needs to cover all the issues which arise in connection to licensing. A few examples of such licensing issues are:

• the detail and definition of the intellectual property being licensed
• the extent of the licensee to use the intellectual property and the limitations on this right
• whether you have the right to license (you may need permission if you are a joint owner of intellectual property)
• whether the rights are exclusively granted, whether the licensee can grant sub-licenses
• whether the licensee is restricted to using the IP in a specific territory, industry or distribution channel
• who will own any improvements to the IP if the licensee develops the IP
• how the parties will realise the benefit from the license (one way you could have the arrangement benefit both parties would be that the licensee exploits by manufacturing and selling and you receive royalty)
• who is responsible for renewing protection of the IP and how the cost of this will be divided
• intellectual property indemnity – protection against infringement by third party, protection against third party claims of infringement (by you), or both
• who is responsible for taking action against third parties who infringe your IP right

If you have a patent which is an endorsed ‘licence of right’, the database will show that you are willing to license your patent. This helps advertise the opportunity and saves you having to individual seek potential licensees.

To apply for a licence of right endorsement, you must file a Patents Form 28 with the UKIPO at least ten working days before your renewal fee is due for the patent.

When you do grant a licence for a patent, it is advised that you inform the UKIPO within six months of granting the right. When notifying the IPO, you should use a Patents Form 21 which will state the type of licence you’ve granted, alongside other information including the patent number.

When you grant an exclusive licence of your trade mark, you or the licensee should notify the UKIPO about the arrangement by filing a Form TM50. This will allow the registrar to make the appropriate amendments on the trade marks register. You should also notify the UKIPO when the licence ends (or the identity of the licensee changes) by filing a Form TM51.

If you wish to license your design right, you should register the licence by completing a registered design form DF12A. This form will require you to provide written proof of the transaction. To cancel the licence, you need to complete a registered design form DF12A.

The assignment of intellectual property rights involves transferring your interest, right and title in the IP to the assignee. This is different to licensing because under an assignment, the assignee has unrestricted use of the IP.

Can intellectual property be sublicensed?

Yes, intellectual property can be sublicensed. If you wish to allow a licensee the right to sublicense, you should specify this in your licensing agreement. The benefit of this is that it allows you to obtain additional revenues of profit from the sublicensee, and allows your IP to grow within a market or industry. If your IP is a product that is sold to customers, granting sublicenses may allow your creation to spread widely across different geographical locations and increase your reputation.

To avoid being inadequately protected, we recommend you get legal advice when giving a licensee the right to sublicense. This is because there are complex issues which need to be considered, including detailed terms which address the conditions under which the licensee can sublicense, the extent of rights which any sublicensee can obtain, the structure of royalties, and other fees payable under the sublicense.

Can intellectual property rights and protection be enforced internationally?

As IP rights are territorial, your rights are only protected in the country that they’re granted in. To increase your protection for your IP rights to be enforceable in other countries, you need to apply to register your IP in those counties. Some countries do allow you to extend your existing UK protection after complying with a few local formalities. Other counties may require a full application in accordance with the laws of that jurisdiction.  You may also want to apply for utility model protection (sometimes known as ‘petty patents), where they are available in other countries. You can’t get a utility model in the UK, but they can offer protection in more than 50 countries worldwide. Utility models are quicker, easier and cheaper to obtain than patents, but they don’t last as long and the protection against infringement isn’t as strong as a patent. Read more about utility models.

The World Intellectual Property Organisation (WIPO) does have a system which allows you to apply for protection in a number of counties through a more simplified process. For example, it has an ‘International Protection of Inventions’ which allows the filing of a single patent for multiple countries. Similarly, there is a ‘International Protection of Trade marks’ and ‘International Protection of Industrial Designs’ which allows you to apply for protection in multiple countries by filing a single application. You can get access to these systems from here.  You can find out more general information about international patent protection in our Patent FAQs.

How can intellectual property be protected on the internet? Can you protect intellectual property online?

You can protect your IP address by using a virtual private network (VPN), as this protects all your data online by encrypting it and using proxy tunnels. This helps to hide your IP address, reducing the chance of your IP address being targeted by hackers. You can also update your firewall rules to prevent unauthorised access to your online website.

How can intellectual property in technology and new media, such as apps or software, be protected?

Although the creative work in apps and software (like images, videos, sound, text) are protected by automatic copyright, the actual function of the app and software will need to be patented to gain adequate protection, provided that it meets the criteria for patent protection.

Intellectual property disputes

What is intellectual property theft or intellectual property violation?

IP theft is the offence of stealing intellectual property and copying it to subsequently distribute the counterfeit goods, whilst IP violation is an infringement of your IP rights.

It is therefore important that, in addition to protecting your intellectual property by registering it with the UKIPO, you also take measures to limit access to your IP. This may mean reducing the number of individuals who can access the IP and limiting the individuals with knowledge of the manufacturing process.

Our specialist intellectual property dispute lawyers who can give you more detail on different IP offences and infringements and how to resolve IP disputes.

What can you do if the other party breaches a clause in your intellectual property agreement?

If there is a breach in an intellectual property agreement, you should consider whether the agreement specifies that breach as an event of termination.

In most IP agreements, it is likely that you can terminate the agreement if the other party commits a fundamental breach. The agreement is likely to require you to serve written notice on the other party, stating that you are treating the agreement as terminated.

It is also likely that the agreement will specify the consequences of termination. For example, it may state that the IP rights granted to the other party for the purpose of the IP agreement are returned to the party that granted the right. Alternatively, it may concern any IP created together with the other party; indicating that you both have joint ownership.

In addition to treating the agreement as terminated, you can also sue the other party for breach of contract. This would allow you to recover damages to put you back in the position you would have been in if the agreement terms had been met.

A final remedy, which is much rarer, is specific performance. This would involve the court ordering the other party to perform their contractual obligation which they had breached.

What can you do about intellectual property disputes with international parties?

If the international party is in a country which is a member state of the World Trade Organization (WTO), you can use the international dispute system (known as the Dispute Settlement Understanding) to resolve any IP dispute.

Under the WTO Dispute Settlement Understanding, where there is a trade dispute, the parties can engage in consultation and mediation. If this is unsuccessful, the WTO panel can hear the case and report back to the parties.

The benefit of this international dispute settlement is that the parties can benefit from arbitrators and independent experts which are specialists in the area. This can ensure a more accurate and fair settlement of a dispute.

Intellectual property agreements

What kinds of intellectual property agreements are there?

To exploit any IP that you own, you may find that you want to enter the following types of agreement in relation to that IP:

• IPR licenses
• franchise agreements
• research and development agreements
• co-operation agreements
• assignments
• intellectual property sale agreement
• other commercial agreements which require inclusion of intellectual property clauses (such as a business sale agreement)

What happens if you have no agreement or contract for your intellectual property?

You don’t have to enter an intellectual property agreement to exploit your intellectual property. For example, if your intellectual property is an application you have created, you can exploit this by selling this yourself.

However, if you do enter an arrangement with another party, in which the other party helps you exploit the IP, then you should have an agreement to regulate the rights, responsibilities and liabilities between you. Failing to have a written agreement is risky as the written terms can help you and the contracting party resolve any disputes quickly, without disrupting your relationship. An agreement is also important because the terms can state the division of liability, as well as details about the limitation of the right granted and conditions such as payment.

Do you really need a separate intellectual property agreement or can you just add IP clauses into your other agreements, such as shareholders’ agreements, joint venture agreements, partnership agreements, or consultancy agreements?

If you are entering an arrangement with a party which concerns intellectual property, you can include the relevant clauses in the agreement to avoid drafting a separate intellectual property agreement.

This is particularly important when you enter a joint venture (JV) agreement, partnership agreement or consultancy agreement where you and the contracting party will share your intellectual property, and/or seek to develop intellectual property. The intellectual property clauses should state what IP rights are being granted, who will have responsibility for pursuing legal action against third parties that infringe the IP rights, and warranties and indemnities.

The intellectual property provisions included will also address matters such as keeping information relating to IP confidential, as well as restrictions on licensing/assigning the rights in the IP to a third party.

Can you use an intellectual property agreement for employees? Can intellectual property clauses be put into employment contracts?

Yes – where you use valuable intellectual property, or are creating intellectual property, you may want to enter an intellectual property agreement which states that any IP created by the employee, in the course of their employment, belongs to you as the employer.  Depending on the nature of the IPR, there are statutory provisions which can apply concerning IPR created during the course of employment. You should seek specialist legal advice on IP rights of employees.

It is advisable that all matters concerning IPR are included in the employment contract itself. If you choose this option, you should seek legal advice when drafting the contract to ensure you have adequate protection for your business and its IP. Key IP clauses which will need to be included are the rights to IP created and improved in the course of employment, as well as a duty of confidentiality in relation to any knowledge held about IP being developed or manufactured.

How do confidentiality and non-disclosure agreements apply to intellectual property?

Confidentiality (non-disclosure) agreements are extremely important when you create IP. Your ability to exploit any created IP is heavily dependent on the creation being unique. If another party learns about the IP (and its manufacture, development or design), then they may use that knowledge to compete with your business and sell, manufacture or develop a similar product. Entering a confidentiality agreement ensures any individual with knowledge of your IP (and its creation), is prevented from disclosing that information to any unauthorised third party.  This allows you to preserve a competitive advantage when exploiting your IP in the market or industry.

How do non-compete agreements apply to intellectual property?

Non-compete agreements prohibit another party from engaging in competing business with you. Non-compete agreements are common in JV arrangements, as the JV agreement usually prohibits each party leaving the joint venture and operating a business in competition with the other (in a particular geographical location). To be enforceable, non-compete clauses and agreements must be proportionate and necessary to protect legitimate interests. For this reason, they are usually limited to a particular geographical territory, and usually apply for the full duration of the agreement and for a short period after termination of the agreement.

Can you terminate an intellectual property agreement?

Yes, most types of intellectual property agreements usually have a clause which states circumstances in which the agreement can be terminated.

The most common events in which you will be entitled to terminate an intellectual property agreement are when either party has breached a term of the condition, when either party enters insolvency (or bankruptcy), and illegality. Specific to IP may be an event in which the IP right being shared under the IP agreement, is subject to a successful claim of IP infringement by a third party.

The intellectual property agreement will also detail the consequences of termination, such as the rights to any IP produced/improved and the return of any confidential information held by each party.

Can you release a party from an intellectual property agreement?

To release a party from an intellectual property agreement, you need to terminate the agreement.

What is an intellectual property licensing agreement and what would it contain?

IP licensing allows you to exploit your IP by retaining ownership of the IP but granting a licensee to exercise some rights in relation to that IP to generate its own profits. Such an arrangement is beneficial as you will be paid royalties for the IP rights granted.

A licensing agreement will contain details about the right being granted to the licensee. This may be the right to manufacture an invention that you have patented, or the right to use a particular application that you have designed. Since you will be retaining ownership of this IP, you will need to specify the limitations on the licensee’s right to manufacture an invention or use an application. Such restriction may involve the licensee relinquishing entitlement to any improvements they make to the invention or application, and restrictions on the licensee’s right to give third parties the right to manufacture or use the IP.

If your licensee is a business, it may have subsidiaries. You will therefore need to consider whether those subsidiaries are also entitled to exercise the IP rights, and how you will monitor their compliance with the restrictions in the licence.

To fully benefit from your arrangement, you may also consider imposing an obligation on the licensee to advertise and promote the IP within a territory. This will help expand your business and build your IP’s reputation.

A further consideration is whether you want to allow your licensee to sub-license, or subcontract the manufacturing process in connection with the IP. If you do wish to allow the licensee these rights, you should ideally require them to obtain your consent.

In connection with this, you will need to decide how your royalties will be calculated. If the licensee does have subsidiaries, you will need to account for this in your calculation. As with all good contracts, you need to be prepared for circumstances in which there is a failure to comply

Other clauses that will need to be included are the procedure for when a third party infringes your IP, and where a third party claims your IP infringes on their IP rights. It’s usual for you (as the owner of the IP) to reserve the responsibility of dealing with such claims.

Alongside this, the standards terms contained in all agreements will be included. For example, warranties and indemnities to protect each party, termination clause, and limitation of liability clauses.

What is an intellectual property assignment agreement and what would it contain?

An intellectual property assignment is an agreement to transfer the rights, interest and ownership in the intellectual property to another party.

The terms included in this agreement will be simpler than those included in a licence. As you will be assigning full rights in the intellectual property, you will not be imposing any restrictions on the assignee’s use and exercise of those rights. As such, it isn’t necessary to have a highly detailed definition of what rights are being granted to the assignee.

Instead, you will agree that you are transferring all rights and title in the IP, to the assignee, with full title guarantee (providing you have full ownership of the IP and are authorised to transfer). You will also need to provide the assignee with warranties and indemnities which assure the assignee that your IP is properly protected by being registered with the relevant organisation, and that it is not infringing on the rights of a third party. It’s likely that you’ll also need to provide indemnity to compensate the assignee if any warranties are breached: for example, if the assignee ends up litigating due to a claim of IP infringement, or where the assignee has to renew protection for the IP since the IP had not been protected properly on the date of renewal.

What is an intellectual property asset purchase agreement and what would it contain?

An intellectual property asset purchase agreement is similar to an IP assignment agreement - as the effect of the agreement is to give the buyer all the rights, interest, and title to the IP. As with assignment, you will cease to hold an interest in the IP after the transaction. However, the IP asset purchase agreement is more common when you are buying and selling a business by way of asset sale. The terms contained within the IP asset purchase agreement will be similar to the assignment as all the rights and interests in the IP will be sold and transferred with full guarantee. Similarly, you will be expected to provide the same warranties and indemnities which assure the buyer that your IP is registered and protected, and that it isn’t subject to claims of infringing third party rights.

What is an intellectual property waiver agreement and what would it contain?

An IP waiver agreement is used in an employment relationship. Where an employee creates a new product (intellectual property) in the course of employment, they will waive their moral rights set out in the Copyright Designs and Patents Act 1988. This is usually done by entering a ‘waiver of moral rights’ agreement.

The document will state that in exchange for a particular sum, the employee (or consultant etc) gives up their moral rights in the IP created including their right to be identified as the author of the work.

What is an intellectual property release agreement and what would it contain?

An IP release agreement is similar to an IP waiver agreement as you will be releasing (or waiving) your rights, interests, and title in the IP concerned. You can use this type of agreement to assign or transfer IP to another person or party.

Subject to the terms of any employment contract, these agreements can be used if you have employees who create or manufacture IP. To ensure you obtain full ownership of the IP they create, you will need to ask the employee to sign the IP release agreement (or a IP waiver, as above). You need to ensure the employee is obliged to sign the agreement by including a term in the employment contract which states the employee ‘must sign such IP release agreement’ as requested by you.

Again, the contents of this agreement will be the same as a waiver. This means there will usually be an amount payable by you as consideration for the other party releasing its rights. Depending on who the other party is, you may seek an indemnity from the person releasing their rights. If the person isn’t an employee, such as a consultant or independent contractor, you should seek an indemnity to protect you in case a third-party claims infringement of its IP rights.

What is an intellectual property contribution agreement and what would it contain?

A IP contribution agreement is an agreement to contribute your IP to another party. This is common in joint ventures when you and the other party are seeking a business activity together, and need to grant the other access to your IP.

However, by contributing your IP, you will be giving up your rights in the IP, meaning that you can no longer exploit the IP.

The contribution agreement would contain terms similar to an IP asset purchase agreement, because you will be transferring all rights and interests in the IP to the other party.

What is an intellectual property TRIPS agreement and what would it contain?

An IP TRIPS agreement, also known as the ‘Agreement on Trade-Related Aspects of Intellectual Property Rights’, is an international treaty administered by the World Trade Organization (WTO).

The countries which have signed up to this treaty agree to maintain a minimum level of IP protection within the country. The treaty covers three main aspects:

1. Minimum standards – achieved by complying with the substantive obligations in multiple conventions, and extending the IP protection of their nationals to nationals of other member countries.
2. Enforcement – member countries must observe certain general principles for domestic IP enforcement procedures and remedies.
3. Dispute resolution – disputes between member countries over compliance with TRIPS are subject to WTO’s dispute settlement procedure.

As this treaty places an obligation on the UK to ensure adequate legislation on intellectual property, you don’t need to worry about the minute details of obligations in this treaty.

What you need to know is that because of this minimum standard adhered to by members, it is now easier to trade with other countries where IP is involved. Thanks to this treaty, if you do grant a patent licence in a country which is a member of the WTO, any disputes which arise in connection to this will be resolved in accordance with the WTO’s dispute settlement procedure.

What is an intellectual property retainer agreement and what would it contain?

A retainer agreement is usually used when you employ or hire a professional for ongoing services when needed, whilst paying a small amount on a regular basis. Although more common when hiring solicitors, you may choose to use this arrangement when employing a consultant who develops and creates IP for you.

When drafting an IP retainer agreement, it is essential to clarify the payment structure. You will need to determine how much you will be paying and when you will be paying the consultant. It is also important to clarify the ownership rights in the IP which is created, as well as any bespoke arrangements concerning profit or cost sharing.

Other terms that should be included are terms protecting confidentiality of information, as well as a requirement on the consultant to obtain necessary insurance, and an obligation to take the necessary measure to protect personal data which the consultant may hold as a result of the arrangement.